The synthesis report of Climate Change 2023 highlights the urgency of addressing climate change and its impact, further intensifying the demand for increased mitigation actions by developing countries.
GS – 3 (Environmental Pollution & Degradation)
Climate Finance, COP 26, Kyoto Protocol, Paris Agreement, United Nations Framework Convention on Climate Change (UNFCCC), Green Climate Fund (GCF)
Evaluate the significance of climate finance in the global climate change discourse and analyze the challenges in meeting the financial commitments as per the Paris Agreement, emphasizing the responsibilities of developed countries towards developing nations. (250 words)
What is Climate Finance:
- Climate finance pertains to the funding acquired from local, national, or transnational sources, encompassing public, private, and alternative financial channels to enhance actions addressing climate change by supporting both mitigation and adaptation endeavors.
- The UNFCCC, Kyoto Protocol, and Paris Agreement advocate for financial support from those Developed Countries that has more financial resources to aid Developing Countries that are susceptible to the impacts of climate change.
- This principle aligns with the concept of “Common but Differentiated Responsibility and Respective Capabilities” (CBDR).
- COP26 : Fresh commitments were made to provide financial support for developing nations in achieving global goals for adapting to climate change effects.
Dimensions of the Article:
- Mandated Climate Finance Obligations
- Deficient Burden Sharing Formula
- Challenges in Mobilizing Climate Finance
Mandated Climate Finance Obligations:
- Under the Paris Agreement, developed countries are obligated to provide financial resources to developing country parties and outline this in their Biennial Update Reports (BUR).
- The commitment to mobilize $100 billion annually, initially pledged at the Copenhagen Change Conference in 2009, remains unfulfilled. The failure to achieve the promised financial commitment continues to pose challenges, especially considering the impact on the Global South’s efforts as expressed in their nationally determined contributions (NDCs).
- Developing countries’ projected needs, estimated close to $6 trillion by 2030, far exceed the current financial resources available, causing a significant gap in supporting their low-carbon transition and climate resilience.
Deficient Burden Sharing Formula:
- While developed nations are obligated to provide financial resources to developing countries, a lack of consensus exists regarding the distribution of this financial burden among developed nations.
- Analysis reveals disparities, such as the United States providing a mere 5% of its fair share in 2020, illustrating the challenge in achieving equitable financial contributions.
- The absence of a concrete mandatory formula for collecting funds poses uncertainties in achieving the new collective quantified goal for climate finance by 2025.
- The absence of a defined criterion for mobilization results in the utilization of a replenishment process for financial mechanisms like the Global Environment Facility (GEF) and the Green Climate Fund (GCF).
Challenges in Mobilizing Climate Finance:
- The GCF, established to administer a portion of the $100 billion for transitioning developing countries to low-emissions and climate-resilient development paths, witnessed only partial contributions during its second replenishment.
- The shortfall in meeting financial commitments signifies the challenges in mobilizing resources, especially considering the lack of a uniform approach to count international public climate finance.
- Additionally, the absence of strong political will and urgency among developed nations, witnessed during the global financial crisis in 2009-10, contrasts with the sluggish response in addressing the climate crisis, thereby complicating the facilitation of necessary climate finance transfers from developed to developing nations.
Way Forward and Conclusion:
- The upcoming COP 28 in Dubai presents a critical juncture for revisiting and reiterating the financial commitments crucial for addressing climate change.
- Redefining and strengthening the financial mechanisms such as the GCF to secure consistent and sufficient financial contributions remains essential.
- The parallels drawn between the global financial crisis response and the current climate finance crisis highlight the need for stronger political will and immediate action to secure a sustainable financial framework for addressing the global climate emergency.
- The discrepancies in fulfilling climate finance commitments indicate the pressing need for transparent and robust financial mechanisms.
- The COP 28 offers a vital opportunity to reinvigorate global efforts and commitments, emphasizing the urgency of addressing the climate finance crisis to secure a sustainable and equitable climate future.